4 Reasons Apple Will Earn More Than $10.38 a Share

It's that time of the quarter again. Apple (NAS: AAPL) checks in on Tuesday with its fiscal third-quarter report.

We know what the pros think. They see the iEverything company earning $10.38 a share, 33% ahead of where it was a year earlier. However, this has already been a tricky earnings season. It also doesn't help that the smartphone market is showing signs of weakening, and the dicey economic recovery threatens to slam the brakes on purchases of consumer electronics in general.

Don't bet against Apple, though. There are plenty of reasons to believe that Apple will hold up just fine when it reports shortly after the market close on Tuesday. Let's dive right in.

1. Apple historically trounces expectations
After a long streak of trouncing Wall Street's profit targets, the class act of Cupertino pulled up lame during last year's fiscal fourth quarter. The miss sent shockwaves through the market, especially since it was the tech bellwether's first report since the passing of Steve Jobs.

However, Apple got back up on its horse and kept galloping. The following quarter, the company earned $13.87 a share, obliterating the $10.16 that cautious pros were forecasting. If you figured analysts would smarten up, realizing that Apple was back on track, you would be as wrong as they were the following quarter, when Apple landed 23% ahead of where Wall Street was perched.

In other words, Apple is back in market-thumping mode. Don't wager against that powerful trend.

2. The trend is still moving higher
Three months ago, Wall Street figured Apple would be earning $9.92 a share during its fiscal third quarter. As of last month, that target had moved up to $10.35. The analyst average stands at $10.38 now -- a penny shy of where it was a week ago -- but still part of an overall trend to move projections higher.

This is important. If Apple's streak of beating the market isn't enough, seeing estimates move higher likely indicates that the figure is stale. Sandbagging by analysts who have yet to update their projections is keeping the number low.

Think about it.

3. The rare miss came with a good excuse
Apple's miss last year probably shouldn't have come as a surprise.

The company's annual iPhone refresh -- a move that had taken place in June or July in previous years -- was bumped to October. In other words, the company was pitting fiscal 2011, when the iPhone 4 hit the market, with fiscal 2012, when savvy consumers stayed away knowing that a new iPhone was coming.

There have been no historical shifts this time.

4. The coast is clear
There have been no competitors making threatening moves.

Nokia (NYS: NOK) released the Lumia 900 -- the flagship phone based on Microsoft's (NAS: MSFT) mobile operating system -- at the beginning of the fiscal quarter. Some feared that Microsoft's desperate push and aggressive marketing would eat into the market leadership of Apple and Google's (NAS: GOOG) Android, but how did that all play out?

Nokia just slashed the price of the phone in half amid reports of stalled sales after Microsoft announced the upcoming Windows Phone 8 update that will leave earlier phones in the cold.

There may very well be some challenges in the new quarter. Google's Nexus 7 is a bold tablet given its $199 price point. Researchers are pointing to the third calendar quarter -- not to be confused with Apple's fiscal third quarter, which ended in June -- as a soft one for both PC and smartphone sales.

However, none of this played a factor in what's been happening at Apple during the three previous months. We'll cross the fiscal fourth-quarter bugaboos when we get there. For now, the smart money has to be on another strong quarter at Apple.

Apple jacks
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At the time thisarticle was published The Motley Fool owns shares of Microsoft, Google, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Microsoft, Google, and Apple and creating bull call spread positions in Microsoft and Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has adisclosure policy.

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